In Depth

The federal judge who granted a preliminary injunction in the combined suits against the Department of Child Services for
cutting reimbursement rates for adoptive and foster parents and child care agencies found the quality of care for children
would suffer if the rate cuts stood.

In a 38-page order released Tuesday, U.S. District Judge Sarah Evans Barker detailed her reasons for granting the preliminary
injunction from the bench Jan. 20 that blocked the rate cuts by DCS.

"The injuries that all categories of plaintiffs stand to suffer if an injunction is not issued are significant and the
type for which there is no adequate remedy at law," she wrote. "There is much more than money at issue in the case.
... Plaintiffs are likely to suffer a variety of substantial harms due to the rate cuts."

Both the parents of adoptive and foster children and the Indiana Association of Residential Child Care Agencies sued DCS
in December after learning of cuts to reimbursement rates by the DCS to those parties. The suits were combined into one case,
C.H., et al. v. James Payne, No. 1:09-CV-1547. The suit represents more than 100 agencies statewide and has been
certified as a class action for foster and adoptive parents throughout the state.

The issue is the rate setting done by DCS, which cut or froze rates to the service providers and parents anywhere from 14
to 20 percent for the service providers and up to 10 percent for parents. The cuts came after the state had asked DCS to cut
10 percent from its budget to send those funds back to the state.

After the state assumed responsibility for the standard per diem for rates, DCS examined the rate structure and decided to
lower the reimbursements based on a United States Department of Agriculture report on actual expenditures parents made on
children and a nationwide report on foster care per diem rates.

But relying on the USDA report was "questionable" because the report included all children and didn't specify
information on costs of raising foster children, wrote Judge Barker. DCS also relied on the figures for the lowest income
group in its calculations - numbers that are skewed by the poverty of the recipients instead of reflecting what items actually
cost, she continued.

DCS also failed to use a methodology that takes into consideration the actual costs of providing items specified in federal
statute such as food, school supplies, and reasonable travel expenses to visit the child's home.

"In addition, to the extent that budgetary concerns drove the decision to impose the uniform across-the-board ten percent
reduction, rather than consideration of the specific factors mandated by the statute, such a procedure is in our view inappropriate
under Title IV-E," wrote the judge.

DCS also failed to consult with adoptive parents in making individualized determinations of the payment amounts based on
the specific needs of children being adopted.

In regards to the service providers, they too successfully proved the need for a preliminary injunction preventing the cuts.
The rate setting for the providers didn't follow any specific written procedure and appeared to be "almost entirely
motivated and controlled by budgetary concerns," wrote Judge Barker.

She also found persuasive the IARCCA's contention that the rate cut directive DCS instituted was in the nature of a rule
and so it is subject to the statutory requirements that govern rulemaking.

"It is the quality of care promised to the children under the applicable statutes that is at stake in the case at bar,"
she wrote. "Any deficiency in such care cannot later be undone with monetary compensation."

The preliminary injunction restrains DCS from reducing or altering the reimbursement rate to any licensed child care placing
agency or residential placement provider below the DCS rates paid on Aug. 1, 2009, and below the rates on Dec. 31, 2009, for
the parents. The order also prevents DCS taking any action to circumvent the order, such as transferring a child to a less
expensive placement or reclassifying a child to a less expensive rate. The injunction remains in effect until further order
from the court.

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